Fundamentals of Eminent Domain
 By Vincent C. Rampton

In Utah as elsewhere, the sovereign holds (and may delegate to other agencies and instrumentalities) the power to appropriate private property for public uses; conditioned, however, on the payment of just compensation to the property owner.¹ Since statehood, landowners in the State of Utah have been subject on occasion to demands for their property by the State, a county, a municipality, improvement district, utility company or other condemning agency, and have found themselves – through no wish of their own – embroiled in a dispute over the legitimacy of the proposed use, the amount of land reasonably needed, and (obviously) the amount of compensation due.

The lion’s share of such disputes are resolved through negotiation and settlement. To promote this result, state law imposes upon condemning agencies a variety of pre-condemnation obligations, such as appraisal of the property sought to be condemned with the input of participation of the landowner, and reasonable and expeditious negotiations (including, if needed, additional appraisal work and, in all cases, a full summary of the condemning agency’s basis for its valuation of the property).²

If such negotiations fail, state law again offers an alternative to litigation, through the offices of the private property ombudsman, whose services are available for advising property owners, facilitating mediation, and (if the parties so agree) conducting of binding arbitration.³

Some cases, though, survive or sidestep all such alternatives to litigation. In these cases, the Utah property owner is legally entitled to a determination by a court of law that: (1) condemning agency proposes to put the property to a use authorized by law; (2) the property to be taken is necessary to that use; (3) the condemning agency will put the property to the authorized use within a reasonable period of time; and (4) if the property is already devoted to the public use, that the use to which the condemning agency seeks to put the property is a more necessary public use.⁴ Finally (and assuming that the property may be taken under those circumstances described above), the property owner is entitled to a determination, by either a court or jury, of what “just compensation” is due in exchange for the property taken.

What follows does not pretend to be an exhaustive dissertation on the property owner’s rights in eminent domain litigation. It is, rather, a brief overview of the rights due a property owner finding himself or herself haled into court by a condemning agency seeking to confiscate private property for public use.⁵

I. Pleadings

A. Is the Complaint Adequate?   Like most jurisdictions, Utah long since abandoned the requirement of detailed or technical pleadings, the law recognizing that the complaint which gives a brief statement of the plaintiff’s claims, sufficient to put the defendant on notice thereof, is adequate.⁶

A condemnation complaint, however, must at a minimum contain certain elements.⁷ These include the following:

1. the name of the condemning agency (styled “plaintiff”);
2. the names of all owners or claimants of the property, if known, or a statement that they are unknown (all of these must be styled “defendants”);
3. a statement of the plaintiff’s right to condemn;
4. if condemnation is a property for a right of way, a map showing its course and termini; and
5. a description of each piece of land sought to be condemned, together with an indication of whether all or only a portion thereof will be taken.

Where the condemning agency is either a political subdivision of the state or a corporate entity, the power to condemn must typically be established by resolution of the governing body.  The resolution is generally attached to the complaint.

B. Must the Owner Answer? Strictly speaking, the landowner is not required to answer a complaint in condemnation. Since the conditions precedent to condemnation are jurisdictional, the condemning agency must prove its case to the court’s satisfaction with or without input or participation by the landowner.⁸ As a practical matter, though, the landowner should seek the assistance of effective legal counsel, or be bound by the slimmest prima facie showing of the condemning agency as to the right to a necessity of the condemnation, and (more critical) the unchallenged assessment of the condemning agency as to the proper amount of just compensation to be paid therefore. 

C. Are All The Proper Parties Present? Strictly speaking, it is the condemning agency’s responsibility to see to it that all holders of interests of record in the property sought to be condemned are joined as defendants in the action, so that their respective interests may be taken and just compensation paid.  Failure to join the holder of an interest in property to be condemned, however, does not void the proceeding as to holders of interests who are made parties defendant; it simply becomes a nullity as to the omitted interest holders.

As a practical matter, it is certainly in the landowner’s interest to notify and solicit participation of all holders of interest in the property.  Absence such notice and participation, the holders of security interest in the property may have resulting claims against the landowner which would need to be resolved in separate proceedings, and could result in inconsistent valuations of the property to the landowner’s detriment. 

II.  Motion and Order of Immediate Occupancy.

By law, the condemning agency does not need to wait until the conclusion of trial before taking possession of the property to be condemned. Rather, the condemning agency may petition the court immediately for occupancy of the property pending final resolution of the case.⁹   To obtain immediate occupancy, the condemning agency must (1) make a prima facie showing of the right to take the property, and (2) deposit with the court a sum equal to not less than seventy-five percent of the condemning agency’s appraisal of the property (at the immediate occupancy phase, the landowner has no right to challenge the adequacy of this figure).  Proof may be taken by affidavit.  The determination by the court that the condemning agency has the right to immediate occupancy is not a final adjudication of the condemning agency’s right to take, unless the landowner so stipulates (something which the condemning agency’s counsel will try to persuade the landowner to do). As a practical matter, however, once the property is occupied and in use by the condemning agency, the court is going to be more reluctant to find no taking authority existed when the matter comes to trial. 

At any time after completion of hearing on an immediate occupancy motion, the landowner is at liberty to withdraw funds deposited by the condemning agency incident to the order granting the motion. Note, however, that such withdrawal waives any further right which the landowner may have to contest the condemning agency’s right to take the property, or any other issue in the case except the right to receive greater compensation.¹⁰ The owner is thus on the horns of a dilemma: if the money stays in  court, it earns no interest, while if it is withdrawn, the right to contest the taking is lost.

III. Discovery.

A landowner is entitled to conduct all types of discovery provided in the Rules of Civil Procedure in order to prepare for contesting a condemnation proceeding, or for challenging the amount of just compensation to be awarded thereunder.  This includes written interrogatories and document requests, depositions of decision makers and other individuals with knowledge, and requests for admission.  Through these devices, the property owner may explore the authority to condemn, the necessity to take, and the timetable for intended use of the property (see below).

In addition, the landowner is entitled to advance disclosure of the condemning agency’s basis for its contended just compensation figure.  If (as is typical) the condemning agency is relying on one or more appraisals, the landowner is entitled to see the appraisals prior to trial. (If the condemning agency is relying on appraisal at trial which differs, either in source or amount, from that shared with the property owner before litigation began, the landowner is entitled to a copy of the new report.)  Under recently-adopted amendments to the Utah Rules of Civil Procedure, the disclosure of appraisal reports  – like all expert reports – is provided for automatically, no later than thirty days after discovery of fact witnesses is completed.¹¹

IV.  Issues at trial. 

A. Does the Agency Have the Right to Take? The power of eminent domain is strictly construed, and must arise by statute, either expressly or by necessary implication.¹²   Utah law does not vest any particular government agency, political subdivision or other instrumentality with blanket eminent domain rights; rather, the power of eminent domain may be invoked in aid of anyone of a number of enumerated “public uses”. These permitted “public uses” appear at various locations through the Utah Code; most are enumerated in the Eminent Domain Code itself.¹³ As a threshold issue, then, the landowner may raise to the court whether the proposed taking is an aid for recognized public use.

B. Is the Property Necessary to the Proposed Use? A landowner’s first response to the news that his or her property is being condemned is likely to be “why me?” Technically, a landowner is entitled to present evidence at trial that other property would be more suitable to the intended use than his or her own. As a practical matter, however, courts are reluctant to second-guess a condemning agency’s selection of property for the proposed public use, regarding said selections being within the purview of agency’s responsibilities.

A more fruitful challenge may be mounted to the amount of land being condemned.  The condemning agency must establish to the court’s satisfaction that it needs all of the property being condemned. A clear showing that, for example, the condemning agency is taking more than it reasonably needs for the foreseeable future, in the interest of “warehousing” the surplus property for future expansion, can result in a dismissal. 

C. When Will Use Take Place? As noted above, the condemning agency is technically required to show that it will be using the condemned property within a reasonable time.  Courts have not placed any precise definition on this requirement, however.  It is probable that, if the condemning agency has a plan in the works for utilizing the property, even if no precise timetable has been formulated, the taking will be valid. (On the other hand, condemning agencies have had condemnation actions dismissed where it emerged that they were seizing and stockpiling property in the present for use at some unspecified time in the future, as a hedge against increased property values.)

D. So, How Much? (Just Compensation)   This is the issue on which most condemnation trials turn. The trier of fact (whether or judge or jury – see below) makes a determination, based on evidence presented by the parties or their experts (see below), and orders the owner’s conveyance of the property to the condemning agency, entering judgment if favor of the landowner and against the condemning agency for the amount of compensation determined. 

1. Basic Concept.  By law, “just compensation” means the fair market value of the property being taken.  “Fair market value” means that price which a willing buyer would pay to a willing seller in order to acquire the property, assuming devotion of that property to its “highest and best use” (meaning most economically advantageous use).

2. Elements of Just Compensation. The first and most obvious element of just compensation is the fair market value of the square footage actually taken by the condemning agency. This, though, is only one part of the story.

Constitutionally, a property owner is entitled to compensation for property either taken or damaged by a condemnation.¹⁴ Utah’s eminent domain code further provides that the landowner is entitled to damages to property even where “no portion thereof is taken”.¹⁵ Thus, full compensation may include: (1) the value of property taken; (2) if the property to be taken is part of a larger tract, the diminished value of the whole following the taking (which will of necessity encompass “severance damages” to the remaining parcel; (3) damage to other property caused by the take, even if no portion of such other property is taken.  All three elements are typically encompassed in a single appraisal analysis which evaluates the entire property before the take, and the remaining property after the take.

In many cases, some portion of the property sought to be condemned will be taken on a temporary basis only (such as for a “construction easement”); just compensation for such a “temporary taking” is also recoverable, and is typically measured as the fair rental value of the property occupied for the duration of the taking. 

Utah law makes no provision for the recovery of court costs or attorney’s fees to the landowner accrued as a result of the condemnation.

3. Time of Determining Just Compensation.   A fair amount of time usually passes between the initiation of a condemnation action and final verdict at trial.  The question thus arises: as of what date does the trier of fact fix the amount of just compensation?   Typically the property has appreciated between the time the case was filed and the time the final verdict was rendered.

By law, the time for valuation of the condemned property is set as of the date of service of the summons.¹⁶ A recognized exception, however, exists where so much time has passed (and so many circumstances change) between the date of filing of the action and the date of trial that award of the fair market value of the property as of the commencement of litigation would not adequately or justly compensate the landowner for the property being taken.  Under these circumstances, the court will readjust the date evaluation to the date of trial.

4. Apportionment of Compensation. The apportionment of just compensation among various interest holders in the property may create special problems at trial. As a rule of thumb, while the court must value each interest in the condemned property separately,¹⁷ the condemning agency is not forced to pay more than the fair market value of the property taken or damaged in fee simple absolute; the resulting amount of that compensation must be divided among the various interest holders according to their rights in the property. 

Where property is subject to a mortgage, trust deed or other such encumbrance, the disposition of just compensation award is typically governed by contract between the property owner and the mortgage holder or trust deed beneficiary.  Often, the encumbrancer will have the right to payment in full upon condemnation pursuant to a “due on sale” clause or other similar provision in the loan documents. The condemning agency may not, however, be forced to take the property subject to the encumbrance.

The interests of lessor and lessee in condemned property is likewise typically handled by agreement between the parties.  Most modern residential and commercial leases contain a provision that, should the property be condemned, the lease terminates and all compensation either goes to the landlord, or is apportioned in some other fashion. In the absences of such provision, however, the court must determine whether the leasehold interest has a separate, recognizable fair market value. Such value, if it exists, is measured by the fair rental value of the property for the balance of the lease term provided, less the rent reserved in the lease agreement.  This “bonus value” (reduced to present value) is awarded to the tenant; the remainder of the compensation goes to the landlord. Typically, a condemning agency will not become involved in this issue, and leaves the property owners/lessees to sort it out.   It is sensible to have the parties sort the issue out by agreement in advance.

5. Interest. The landowner is entitled to an award of interest at the statutory rate of 8% on all compensation awards, computed from the date on which the condemning agent takes occupancy of the property to the date of judgment; however, no interest is awarded on the amount of compensation paid into court incident to the obtaining of an order of immediate occupancy.¹⁸

V. Procedural Rights at Trial.

A. Trial by Jury. A landowner is not entitled to have a jury determine whether or not the condemning agency has legal authority to condemn.  This is a determination for the court. 

A landowner is entitled, however, to have a jury determine the amount of just compensation payable to him or her incident to the taking.¹⁹

Note, however, that the right to trial by jury in a civil matter must be requested in accordance with the Utah Rules of Civil Procedure; otherwise, it is waived.  A jury demand must be filed not later than ten days after the last pleading is filed.²⁰

B. Burden of Proof.  In a regular condemnation procedure, the condemning agency bears the burden of proof of all operative elements of the complaint.  (See above).  Practically, though, a landowner who wishes either to defeat the condemning agency’s right to take the property or to increase the amount of just compensation awarded, needs to be prepared to go forward with the burden of persuading the court.

C. Evidence.

1. May the Owner Testify?

The landowner is always entitled to testify in a proceeding seeking to condemn his or her property.  The owner is competent to testify as to any facts within his or her knowledge on any issue relevant to the questions before the court (including historical use of the property, whether or not the condemning agency has complied with pre-litigation legal requirements, any facts which may form the foundation of expert opinion testimony concerning the property’s value, or any other issue of fact bearing on the condemning agency’s right to take the property, or the damages awarded in light thereof). 

A more delicate situation arises where the landowner wishes to take the stand and testify as to his or her opinion of the property’s value, for purposes of assessing just compensation.  Historically, a landowner in Utah was permitted to testify as to his or her own opinion of value as an automatic right, arising out of the fact of ownership alone.²¹   More modern cases, though, have required that a property owner may testify as to value of property only upon laying a proper foundation showing that he or she has significant familiarity with the property and factors affecting its value to offer an opinion.²² Even where permitted, the property owner’s opinion as to value is likely to be limited to its present use, rather than its “highest and best use” (a matter as to which he or she is unlikely to be qualified to give testimony); a judge is entitled to instruct the jury to take into account the property owner’s bias in offering opinion testimony; and the admission into evidence of opinion testimony from a landowner as to the value of his or her property without proper foundation has been held fatal to a jury award.  All things considered, a landowner is best served by leaving opinion testimony as to his or her property’s value to an expert appraiser. 

2. Expert Testimony. A landowner is entitled to rely on the testimony of experts in all phases of a condemnation proceeding. This includes expert testimony concerning the proposed use of the property to be condemned, the necessity of the property to that use, and the fair market value. 

In a typical condemnation action, where there is no real issue as to the right of the condemning agency to take the property, the main issue is fair market value, and turns into a “battle of the experts”.  Expert testimony concerning fair market value needs to be offered by an appraiser licensed with the State of Utah, and certified to offer the type of appraisal in question.²³   Note that, even if the matter is being tried to the jury, the court must make a preliminary determination as to the expert’s qualification to give testimony.

E. Cross Examination.  As in any legal proceeding, the landowner has a fundamental right to cross examine all witnesses testifying on behalf of the condemning agency. Cross examination can challenge any aspect of the agency’s case, including the right to take, necessity of the property for the proposed public use, intended use of the property, and fair market value. 

Cross examination in a typical condemnation case focuses on the appraiser’s expert testimony, attempting to discredit the premises on which it is based.  To the extent that the appraiser’s testimony relies upon market date (i.e., comparable sales), cross examination may challenge the similarity of comparables in terms of time, location, and circumstance.  To the extent that the appraiser’s testimony relies upon replacement cost of improvements, cross examination may challenge construction cost estimates and other related assumptions. To the extent that the appraiser’s testimony relies upon capitalization of income, cross examination may challenge both assumptions on income and the proper capitalization rate utilized.  Similar challenges can be mounted to an appraiser’s opinion concerning severance damages to property  not taken. 

To the extent that multiple parties defendant are involved, the landowner has the right to challenge expert testimony adduced by a co-defendant concerning the nature and extent of their right to participate in a compensation award.  For example, the landowner may challenge testimony offered by a commercial tenant of the fair market value of the remaining tenancy (see above).

F. The Jury Charge. The landowner has the right to submit proposed instructions for the jury (if any) considering award of just compensation.  By definition, jury instructions in a condemnation case focus on means of calculating “just compensation” under law (including the definition of fair market value, highest and best use, etc. – see above).  The landowner and his or her counsel will wish to insist upon instruction to the jury that the compensation to be paid by the condemning agency must fully and fairly compensate for all taking and damage issues.

G. Final Order of Condemnation.   Assuming a finding by the court that the condemning agency has authority to take the condemnation property, a final award will vest title to the property in the condemning agency, and enter judgment in favor of the landowner (and other holders of interest in the property) in an amount equal to the just compensation awarded in the case. 

VI.  Appeal

Within thirty days of entry of the court’s condemnation award, the landowner has the right to appeal the court’s decision to the Utah Supreme Court (which, in turn, my pour the proceeding over to the Utah Court of Appeals for resolution).  As in other civil actions, the Supreme Court (or, if referred, the Utah Court Appeals) will review all legal issues, such as the condemning agency’s right to take, for correctness (that is, giving no deference to the trial court’s findings); however, it will review all factual findings (including fair market value) only to see whether the findings and verdict of the lower court were sustained by the evidence.  Typically an appellate court will not overturn a trial court’s verdict as to fair market value and just compensation unless it can be shown that the jury was improperly instructed as to applicable law, or that prejudicial error occurred in the admission of improper evidence.  

VII. Conclusion.

The property owner facing an eminent domain proceeding needs to consider carefully whether the cost, delay and uncertainty of litigation are worth the potential result.  Much time and frustration can be saved by settling, arbitrating, etc. 

On the other hand, the court system is the ultimate sentinel guarding the owner’s constitutional right to due process and private property.  A condemning agency is, by definition (and very properly), anxious to own the land for as little money as possible, and get on with its project as quickly as possible.  It is the litigation process which balances that desire against the rights of the owner.  Any statistical survey of eminent domain cases tried to verdict will reveal that the owner who presses his or her rights enjoys a significant chance of realizing far more than the condemnor offered at the outset.  The system, in short, works very well, and landowners should not hesitate to seek recourse to its protections.

Footnotes

1. Constitution of the United States at Amendments 5 and 14; Constitution of the State of Utah at Article I, Section 22.

2. See Utah Relocation Assistance Act, Utah Code Ann. § 57-12-1, et. seq.

3. Utah Code Ann. § 63-34-13, et. seq.

4. Utah Code Ann. § 78-34-4.

5. These materials do not purport to address issues of inverse condemnation, i.e., the rights of a property owner whose land has been taken (or his or her use thereof so limited by government action as to amount to a taking) through some government action other than institution of an eminent domain case. In these circumstances, it is the landowner who must file suit against the taking agency, alleging a de facto taking of his or her property, and forcing the involuntary acquisition thereof and payment of just compensation by the condemning agency. Inverse condemnation claims raise an entirely separate set of issues beyond the scope of this discussion.

6. Rule 8, Utah Rules of Civil Procedure.

7. Utah Code Ann. § 78-34-6.

8. Utah Code Ann. § 78-34-4.

9. Utah Code Ann. § 78-34-9.

10. Utah Code Ann. § 78-34-9.

11. Rule 26(a)(3), Utah Rules of Civil Procedure. 

12. Great Salt Lake Authority v. Island Ranching Company, 18 Utah 2d. 276, 471 P.2d 504 (1966). 

13. Utah Code Ann. § 78-34-1.

14. Constitution of the State of Utah, Article 1, Section 22.

15. Utah Code Ann., § 78-34-10 (3).

16. Utah Code Ann. § 78-34-11.

17. Utah Code Ann. § 78-34-10.

18. Utah Code Ann. § 78-34-9(5)

19. Cornish Town v. Coler, 817 P.2d 305 (Utah 1991). 

20.  Rule 38, Utah Rules of Civil Procedure.

21. Provo River Water Users Association v. Carlson, 103 Utah 93, 133 P.2d 777 (1943). 

22. Utah State Road Commission v. Johnson, 550 P.2d 216 (Utah 1976). 

23. With respect to various appraiser certifications, see Utah Code Ann. § 61-2(b)-1, et. seq.